Although not one of the headline grabbers in the package of budget bills, the Legislature this year may have helped to fix part of Arizona’s deficit. 

Included in one of the bills (HB 2014), which was signed by Gov. Jan Brewer, is a provision that allows the state  State Land Department to become self-funded.

The measure, which takes effect Nov. 24, allows the land department to keep 10 percent of the sale price of state trust land for operating costs. Previously that money could be spent however the Legislature determined.

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Of the 23 western states, 19 of them have a similar funding mechanism,” said Ben Alteneder, legislative liaison for the land department. “So really we are just catching up to where most everyone else is. This way we can continue to generate revenue in a down economy when the Legislature can’t fund us.”

State trust land is held for 13 public beneficiaries, mainly kindergarten-through-12th grade education and universities. 

Although the market for land has taken its hits along with the rest of the economy, Alteneder said he believes it is coming out of its slump.

“We made $300 million last year,” he said. “Of our 96 years in existence it was our fourth highest year.”

However, only around $150 million of that was permanent sales so if the new rule had been in effect, the organization would have held onto $15 million for operating costs. The department spends around $13 million per year.

Art Flagg, who had several experiences working with the land department when he was with KB Home  and is now president of the Southern Arizona Home Builders Association, said the move will be good for the state, developers and home builders. 

“This is the best thing that has happened to them, they have been underfunded for several years,” Flagg said. “And it could be an economic boom for the state because there is a lot of state trust land that needs to be liquidated.”

Previous to this measure, he said builders had to help conduct the due diligence necessary to get property ready to for auction. Because the properties have to go to auction, speeding up the requests could lead to more money.

“There was one property we were interested in, but by the time it finally came to auction, the economy had slowed and it was no longer of interest to us,” Flagg said. “I could see them easily pulling in half a billion dollars a year. If they’re going to try to sell off assets to help make up the difference, this is the way to do it before they sell off buildings and the capitol,” referring to the state plan to sell off buildings and facilities and less them back to raise money.

Inventory supplies go up

The Tucson residential sales market had a bit of a setback in August, when inventory levels, which had been shrinking all year, took a turn and increased in August. The region’s inventory of homes on the market stood at 6.4 months at the end of August, up from 5.4 months in July, according to Long Realty Research Center.

A market is generally considered to be healthy at about six months’ supply.

The setback can be attributed to the fewer number of homes that were sold in August, 980, down from 1,184 in July.

By price range, homes selling for less than $50,000 have the shortest inventory supply, just two months. The next shortest are homes priced from $150,000 to $174,999, where there is a 3.6 month supply.

The price range with most homes listed for sale are in the range of $125,000 to $149,999 but even the 601 that are on the market are still looking at an inventory supply of 5.5 months.

By zip code, 85757 on the southwest side had the shortest inventory supply at 2.1 months. The next four shortest inventory supplies by zip code are South Tucson’s 85714, with 3.3 months supply; the eastside’s 85748, with 3.4 months; southwest side 85746, with 3.5 months; and southeast side 85730, with 3.6 months.

1st LEED silver

retail center

Oro Valley Marketplace, at Oracle and Tangerine roads, is the first retail project in Arizona to earn Silver Leadership in Energy and Environmental Design certification from the U.S. Green Building Council.

Vestar Executive Vice President David Larcher said, “Oro Valley Marketplace is a wonderful example of our 20-year commitment to responsible development. And with advancements in green building materials and the availability for retail applications, we anticipate more environmental achievements within our projects.”

He said the recognition is a result of the company’s GreenStar initiative.

Oro Valley Marketplace opened in October 2008.

Pima in foreclosures

Although Pima County foreclosures were up more than 7 percent in August from July, the rate in five other Arizona counties is higher, according to RealtyTrac, which is based in Irvine, Calif., and tracks data from 2,200 counties, accounting for more than 90 percent of the country’s population.

There were 1,686 properties in Pima County that were either bank owned or received a notice of trustee’s sale in  August compared to 1,565 in July. That works out to one out of every 253 homes in the county.

The total number of Pima county properties in that category rose above Pinal County, which had 1,442, but Pinal still had the highest rate in the state, at one home in 95 homes. Maricopa County, with 12,862 homes involved in foreclosure proceedings, was No. 2 in Arizona at one in 119 homes, followed by Mohave County with one in 168, Yavapai County with one in 208 and Navajo County at one in 252 homes.

Statewide, the total number of properties in foreclosure dropped nearly 10 percent to 17,807 from 19,694 in July. But the number is up 24 percent from August 2008.

Sales and leases

• Green Valley AZ LLC purchased 3.85 acres of commercially-zoned vacant land at the northeast corner of Camino Del Sol and Camino Encanto in Green Valley from Desert Hills Real Estate LLC from $838,000. The group plans to develop  an Alzheimer’s care facility on the property. Tim De Niro with All Broker Inc represented the buyers. Bob Baker, owner of Sonoran Ventures, represented the sellers.

• Prudent Preservation Partners LLC purchased 281 N. Stone Ave. known as the Bates Family Estate and Mountain Oyster Club from Daniel Bates for $830,000. The plan is to renovate the site into seven separate office complexes for lease and develop a breakfast and lunch cafe. James P. Robertson Jr. of Long Realty Commercial Services and Greg Yares of Long Realty Company represented the buyer. Barbara McGill of Long Realty Company represented the seller.

• Towne Air Freight LLC leased 17,711 square feet from RG-Medina at 6855 S. Lisa Frank Drive in the newly constructed Rockefeller Group building near Tucson International Airport. Towne Air Freight is the first company to move into the building. Peter Douglas and Rob Glaser with Picor Commercial Real Estate Services handled the transaction.

• The Literacy Volunteers of Tucson leased 5,000 square feet of space at 2850 E. Speedway from Mundo Vista Goodman’s LLC. Literacy Volunteers of Tucson previously occupied roughly 2,200 square feet of space at 1948 E. Allen Road.  Robert Davis of Grubb & Ellis Company represented the tenant. The landlord represented itself.

• The Disabled American Veterans Tucson, an affiliate of the national organization, leased 1,500 square feet at 5600 W. Coca Cola Place, Marana, from D.S. Waters of America. Bruce A Suppes of CB Richard Ellis represented the landlord.

E-mail items for this column to jpangburn@azbiz.com. Real Estate and Construction appears weekly.